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Huawei Technologies: India remains a key market

May 01, 2014
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Although the past few years have posed several challenges for the Indian telecom market, there are major opportunities for equipment vendors such as China-based Huawei Technologies. The introduction of 3G and 4G services in the Indian market has increased the need for overhauling infrastructure and the managed services ecosystem. Huawei has won several key 3G equipment orders from Indian telecom operators in past three years and has assisted them in establishing new networks and expediting service roll-out.

The company partnered with Bharti Airtel in launching 4G services in Bengaluru in 2012, and is now betting big on long term evolution (LTE) deployments by other players in the country. Following the government’s policy of spectrum liberalisation, operators which did not secure broadband wireless access (BWA) spectrum in the 2010 auctions are now looking to enter the 4G space. They plan to launch LTE services on the recently acquired spectrum in the 1800 MHz band and would require new infrastructure, equipment and solutions for service roll-out in the coming years. This presents a large business opportunity for Huawei, which is already leading LTE deployments worldwide, along with Ericsson.

Further, the company also stands to benefit from the changing dynamics of the Indian telecom market and has identified growth areas like enterprise and devices to strengthen its presence in India. Huawei entered the enterprise business solutions market in India in 2011. The growing willingness of enterprises to set up next-generation ICT architecture and adopt new technologies such as cloud computing has been the key growth driver for the uptake of Huawei’s solutions. The company’s enterprise customer base in India largely comprises government departments and small and medium companies. Beam Telecom, You Broadband, the Reserve Bank of India, Taj Hotels, ICICI Bank, Medanta, Sterlite, the Bombay Stock Exchange, etc. are some of its customers in India.

Huawei now plans to work with top enterprises in important verticals such as data centres, internet and broadband, hospitality, retail and e-commerce. In April 2014, the company’s Enterprise Business Group, one of its three main business divisions, announced the adoption of a more focused approach for its channel partner network in the country. According to the company, its programme – Connect, Engage and Build – aims to develop a larger channel partner ecosystem through engagement with core partners. This includes strategic partnership with Beetel on networking/IP product lines, Iris and digital distribution and marketing services as well as partnerships with other Tier 1 and value-added partners like Sify, ABS, Primatel and Allied Digital to provide them the latest technology innovations and solutions in order to meet the growing ICT needs of the market. The company has 150 partners in India and the number of focus partners is around 50.

Further, Huawei has been looking to tap the device segment and has launched several handset models. India, of late, has been witnessing a surge in smartphone adoption, which offers significant opportunities for handset vendors. As per Gartner, India witnessed an increase of about 166.8 per cent in smartphone sales in the fourth quarter of 2013 over the corresponding quarter in 2012.

Besides being a large market for its equipment and solutions, India has emerged as a key research and development (R&D) hub for Huawei. The company established its R&D centre in Bengaluru in 1998 – its first such facility outside China. Over the years, the company has opened several other R&D facilities, but India continues to be an important centre. It plays a key role in developing cutting-edge software products/platforms in the areas of next generation and intelligent networks, data communications, network management, telecom middleware, optic networks and mobile handset software for telecom operators across the world. In fact, a part of Huawei’s single radio access network, which helps operators graft their technologically advanced solutions into their existing networks, was developed at the Bengaluru facility. Huawei now plans to increase its R&D capabilities in India and would set up a new facility in Bengaluru at an investment of $150 million.

While India offers huge growth potential for the company, Huawei has faced several challenges in this market. The recent phase of policy and regulatory uncertainity has had a major impact on the businesses of several stakeholders in the telecom value chain. The situation is set to improve in the near future as the government has taken various steps to drive sector growth. Also, the Indian telecom equipment market has several global majors such as Nokia Solutions and Networks, Ericsson, Alcatel-Lucent, Cisco and ZTE. Moreover, security issues related to equipment manufactured in China have always been a key point of dissonance between the Indian government and vendors. In fact, the government has proposed a new policy that would provide preferential market access to domestic telecom manufacturers for government contracts and this may hit Huawei’s business in the long run.

The way forward

Over the years, Huawei has won major contracts from Indian operators, has set up a strong R&D base and made large investments in the country. Going forward, the company expects to gain a significant share in future LTE deployments and is betting big on its enterprise vertical to drive growth in the Indian market.

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